As the school year winds down, many parents may be arranging
child care for their young children. The summer months can be a particularly
challenging time for cash-strapped parents, because the costs of summer camps
or day care can be expensive. However, parents who meet certain criteria may be
able to deduct the price of child care on their taxes.
Many working parents utilize the Child and Dependent Care
Credit each year, which allows them to earn a tax break and lower their tax
bill dollar for dollar. However, some may overlook this benefit during the
summer months when they really need the child care. Under the current rules,
parents can also claim this credit if they have children under the age of 13
who attend day summer camps. However, certain rules apply.
In addition to the age requirements, the parent(s) must send
their child to the day camps so that they may work or seek out employment.
Parents must also have some earned income from working, wages, tips or other
sources in order to qualify. However, one parent who is a full-time student or
unable to mentally or physically care for him or herself may also qualify as
having earned income.
Additionally, overnight camps do not qualify for the credit,
nor does summer school or tutoring sessions.
The child who is being claimed as a dependent must have also
lived with the taxpayer claiming the credit for more than half of the year;
however, certain exceptions exist in cases where the parents are legally
separated or divorced. Separated or divorced spouses should speak with a tax preparer to determine their eligibility.
If your eligible care costs are for one child,
you can count up to $3,000 of care expenses each year toward the credit. Double
that expense cost for the cost of caring for two or more dependents.
The credit can be up to 35 percent of your
qualifying expenses, depending upon your income of course. Remember that since
it's a credit, you get to use it to offset your tax bill dollar for dollar.
Individuals who have questions about their eligibility should
contact their tax preparer and keep detailed records of their receipts or camp
invoices. Organizing these documents in advance can help families keep track of
which benefits - and amounts - they may be eligible for.